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All Forum Posts by: Account Closed

Account Closed has started 18 posts and replied 1514 times.

Post: No cash flow but equity, Is this ok?

Account ClosedPosted
  • Investor
  • Singapore
  • Posts 1,581
  • Votes 3,225

Anyone who believes their "positive" cash flow is a given while appreciation is a gamble hasn't owned enough rentals. Both cash flow and appreciation are projections. Cash flow may be a shorter term projection and appreciation a longer term projection. But both can go wrong. Long vacancy, bad tenant, eviction, high turnover costs, a global pandemic, a terrorist attack, a financial crisis etc etc etc can affect your cash flow in the short term. By and large wealth is built on the back of capital appreciation. That is true in any asset from business to stocks to real estate to bitcoin. Cash flow is what you need to live on. So if you are retired cash flow is very important. If you are wealth building in younger years not so much.

Post: Seattle Requires Landlords To Take Bad Apples . . .

Account ClosedPosted
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Originally posted by @Account Closed:

You are in Singapore and you lecture me about my experiences n Seattle?  Unbelievable. Are you being paid by the Seattle Visitors bureau? Get some perspective. I don't care about your experiences in other places, start your own post. This is about what happens in Seattle. 

Where I live now says nothing about my investing experience. I am from the US, own a bunch of properties there and understand well how properties are listed and rented. And what you say makes no sense at all. I dont own in Seattle but I do own in the Bay Area which is not known to be landlord friendly by any means. Your personal attack rather than reasoned response tells me all about how much your "experiences" and opinions are worth since you cant actually back them up with logical rebuttals to my points.

Post: Seattle Requires Landlords To Take Bad Apples . . .

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Originally posted by @Account Closed:

Seattle has a department of "shoppers" who go to rentals and "apply" for the rental. Isn't that a bit of a Soviet style tactic? When a landlord accepts the "shopper" as a renter and all of the paperwork has been completed, if the landlord conformed to every dot and tittle of the law, he is "released" from the rental and has to remarket the property.

The landlord winds up having taken the rental out of the "market" for a time, assumed he had a renter, prepared his life accordingly, and wasting a bunch of time. But, if he makes a mistake, he gets a letter to come visit some unfriendly people downtown.

Kinda makes you long for the Soviet Union circa 1984

Sorry, this makes no sense at all. I never take a property off the market until I have one months deposit in hand. So any fake renters would have no impact. If someone qualifies and applies, I take the application fee and run the application. If they pass I give them 24 hours to put a non refundable deposit. If the state wishes to pay me one months rent for the pleasure of cat fishing me then what do I care? Meanwhile I continue to show the property and if another real qualified renter puts down the deposit first, its theirs. I really think this analogy to Soviet Union is not useful and is just hyperbole.

Post: Seattle Requires Landlords To Take Bad Apples . . .

Account ClosedPosted
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  • Singapore
  • Posts 1,581
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Nothing wrong in accepting the first qualified applicant. The place where it gets messy is what you are allowed to put as a "qualification". For example today in most places you can screen for prior evictions, restrict pets, have a credit score requirement etc. But slowly the state will insist that many of these are no longer valid. For example in CA you cannot reject Section 8 because source of income is not allowed as a screening tool. And "emotional support animals" are pushing the boundaries of what you can allow in terms of pets. In spite of all this I feel as a mom and pop landlord with single family properties proving anything is very difficult. So these things will apply more to apartment complexes or large corporate owners where you can statistically prove discrimination.

Post: Invest in a negative cash flow property for appreciation?

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Originally posted by @Bruce Lynn:

I know plenty of people are bullish on SFO and Bay area....but also some things working against you.  My gut says don't do it, but I'm sure many will say SFO area is it's own animal with it's own set of dynamics.   

What rent can you get for $1mil place in SFO?   Who's your target market?  What size is that market?  What's your vacancy?

$1mil purchase price, then your target rent should be around $10,000/month.  To me that's a pretty thin market and very transient when you find them.  If they are there long term, they probably should be looking to buy.  If they're not buyers, then they're probably there on short term corporate rotation....so you get move in/move out every year or two...which costs you money for make ready, lease up, and vacancy.   Just something to think about.....

Are people moving to or from CA?

Do you like rent control?

Taxation of "wealthy" people seems to be the talk of the day in CA.   How does that affect your capital gains?

The Bay Area is not Coppel Texas. Its not even Dallas Texas, Maybe closer to Austin TX but even that's not the same. For the above $1M property in the right area your target rent is 3500-4000. Your tenants are tech workers making a combined income in excess of $200K per year. Your vacancy is effectively 0. You can self manage because these people always pay rent. The market price is not determined by rents. Its determined by home buyers. A dual income tech couple can easily afford $1M plus homes. Again. it is not Texas.

Post: Invest in a negative cash flow property for appreciation?

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Originally posted by @Russell Brazil:

Just increase your down payment til you are cash flow neutral.

Change your thinking to view properties as they exist without leverage. All properties cash flow. I'll say it again. All properties cash flow. When they dont, it is because your leverage is too high.  

The risk of the negative cash flow on the property is not due to the property, it is because of your leverage against the property. Drop the leverage amount, til you are break even or cash flow positive. 

Exactly. Negative cash flow is just deferred downpayment.

Post: Todays Jobs Reports on the news

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Originally posted by @Jay Hinrichs:

If you saw the news this morning JOBs report is not as good as anticipated.

I dont know about other parts of the country but when I went to a Panda Express to buy MIss Lori some lunch big poster for hiring
15.50 an hour for basic server 16.50 hour for cook..    

Probably not going to change much until feds wean people off of stim money.

My understanding is that a lot of blue collar people moved away from high cost cities during the pandemic since their jobs all disappeared. It will take some time for them to come back (if they ever do). Low service level wages and high rents are a better explanation than government largesse for this phenomenon.

 And nobody sucks on the government teats harder than bankers and billionaires. Look at the  bank bailouts and tax breaks given to companies like Amazon to set up warehouses. So all this whining about poor people getting a few bucks is getting really tiresome.

Post: Ongoing eviction from hell in California

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Originally posted by @Adriana Arnold:
Originally posted by @Joseph McCrillis:

@Adriana Arnold

That sounds terrible and reading through all this is just wild. I don’t have any experience with this, so I have nothing to offer, but I was wondering if you have the energy to maybe tell

Is what to avoid if anything? Were there red flags that you ignored? Were they great tenants at the beginning? Was there any lesson from a tenant search perspective that was discovered here that many of us often overlook or did you search less thorough than you might next time?

I know you’ll get on the other side of this, but what a ****** journey to get there. All the best of luck in finding the right tactic and loophole to win ASAP.

Thank you Joseph for your input! I am 100% guilty of selecting these tenants based on the idea that they are who they said they were: honest and hard working people that need some help to get back on their feet. Their credit score was low 520 and 545, huge red flags, but my agent said that it was due to them paying for college and that since they had brand new cars, they know their priorities and will be paying rent. 

I made mistake after mistake because I felt sorry for their situation and when tribulations hit us, we really realized the colossal losses their tenancy has created for our family. 

Once again, we hear everywhere how capitalists (property owners) should show more compassion and when they do it leads to situations like the one I am in. 

Wow credit scores of 520 and brand new cars. And the agent said they know their priorities? Maybe you should sue your agent or at least bring them up to their licensing board! Its nice that you want to help people. But rent to qualified tenants and donate profits to charity. 

Post: Ongoing eviction from hell in California

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So sorry to hear of this experience. I also own a rental in California and stories like this scare the crap out of me sometimes! What kind of screening did you do on these tenants? I am super super picky about who I let into my CA property.  I would rather keep the place empty for months before lowering  my standard. And if I cant get those tenants, I will sell the property or keep it vacant for my personal use. 

The lesson here is be VERY careful who you let into your very expensive asset. Do not lower your standards no matter what. If you cant afford a long vacancy you cant afford to own a rental in CA.

Beyond that I have no advice (at least not legal means) beyond what others have said here. But I wish you the best.

Post: So... it is going to be over? Will 1031 drop to $500k max? Yuk!

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Originally posted by @Colleen F.:

@Account Closed   an interesting take on your 50/60s economic statement dates but still relevant points
If High Taxes In The '50s And '60s Produced Good Growth, Then Let's Have High Taxes Again (forbes.com)

Not sure how long 1031 has been around but stepped up basis has been around since the 70s. It benefits the intergenerational transfer of small businesses and  family homes. Not sure there is a benefit to change that, to fund what?  I am a little concerned that none of the changes talk about simplification of tax code or simplifying this complex social safety net that is now being called infrastructure.  

I dont think that the correlation is causation and of course economic growth is driven by many factors. The post WWII environment was hugely favorable to the US for many reasons. The takeaway is that the taxes did not in any way HAMPER the economic growth. And what they did prevent was the ridiculous wealth gap we now see and enabled huge investments in infrastructure (like the entire interstate, railroads, electrification, telecommunications etc etc) that we still rely on today.

For all the whining about changes in tax policy for real estate or capital gains, there is no historical evidence to suggest it will dramatically change the trajectory of the market. 

I will be affected personally like many other investors here and of course Id like to keep more money in my pocket. But I dont believe all this Chicken Little crap about the end of the world as we know it.